Hello All,

When determining what fee amount we should put on the LE for an appraisal how specific must we get?

Lets say the area appraiser charge the following for example:

1. Inside City Limits $500
2. Outside City Limits $600
3. Out of County $650

I am thinking that when we get an application we need to see where the property is located and then determine what fee amount to put on the Loan Estimate.

I don't believe we can just put the high amount on each LE without regard to where the property is located.

Opinions?

Agree with this.^^

Yep, I'd figure out what it'll actually cost and disclose that. It should only take a second.

I'll join the chorus. Your estimates have to reflect the best information you have at the time of the estimate. You have the property location and fee schedule, which varies with the location. You need to use the figure that reflects the location of the property.

Thanks for all the responses!

I'd like to tag on to this thread.

We do loans on properties all over the country, even outside of our own markets (e.g. customer buys a vacation home in some other state). These loans are for high-end homes and it's nearly impossible for us to obtain appraisal bids within 3 days (a lot of appraisers won't provide that so quickly). Home values are well in to the 7 digits. Appraisal management company is not a possibility for us.

Curious to know how others are approaching this issue?

Sounds like you need to rethink your lending strategies. Why is an appraisal management company not a possibility?

I'm not an appraisal expert. Are you? What I've heard is that it may reduce the quality of an appraisal. I'll have to check with our appraisal management group....

awillli, is this something you could potentially average? That's my first thought.

I'd be careful with it being an average since it's a 0% tolerance item...

Could you make it a shoppable service somehow?

On using an average, you update your average like every 6 months and that's just what you charge everyone. That's how you handle it as a zero tolerance because there is no way to know from one deal to the next what to quote.

You can't allow a customer to shop for an appraisal. It's against appraisal rules.

Wouldn't you end up losing money on several of your appraisals, then? You're not allowed to overcharge, correct? So if you're quoting $500, the ones that come in over that you have to pay the difference, and the ones that come in short, you can't charge your full $500... right?

Since these loans are originated all over the country using an average is going to be difficult. The average calculation has to be based on similar markets. IOWs you can't use appraisals fees in CA to compute your average fee in IN.

Review 1026.19(f).

. . . .requires a creditor to use an appropriate period of time, appropriate geographic area, and appropriate type of loan to define a particular class of transactions. . . .

We considered using an average, but as Dan mentions, it would be very difficult to manage and maintain. We have multiple geographic areas for our markets, plus we have loan requests for property locations outside of our markets. For these, we wouldn't have a sample size to average.